Consumers in the U.S. are increasingly delaying soda purchases due to the rise of weight loss drugs and non-alcoholic beverage options.
Despite this trend, Coca-Cola released strong second-quarter earnings on Tuesday, bolstered by robust global demand for its beverages, which led the company to increase its full-year outlook. CEO James Quincey expressed optimism about the results, highlighting solid growth in both overall revenue and operating income despite the evolving market conditions.
However, Coca-Cola reported a 1% decline in volume sales in North America for the quarter. Quincey attributed this decline mainly to weakened performance in away-from-home channels, which include categories like water, sports drinks, coffee, tea, and soda.
The drop in soda sales was somewhat mitigated by the success of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth for the quarter. To counteract the sales slump, Coca-Cola is collaborating with food chains to incorporate its beverages into meal combos. Notably, the company is working with McDonald’s to enhance the fast-food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, equivalent to about $0.84 per share, surpassing forecasts of $11.76 billion and about $0.81 per share. The company adjusted its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in engaging U.S. consumers who are shifting towards weight loss products and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming alcohol less frequently. In early July, Pepsi cited product recalls as a factor contributing to its underwhelming performance in the second quarter.